The South Korean government has implemented a series of revisions to the Individual Income Tax Law (IITL) and Special Tax Treatment Control Law (STTCL), effective from 2026. These changes are designed to ease the financial burden on families, support retirement and pension planning, promote investment, and improve compliance efficiency. Employers, payroll teams, and HR professionals should review these updates to understand their implications for payroll, benefits, and tax administration.
The table below summarises the most impactful changes for payroll and HR teams.
| Category | Key Change | Effective Date | Limit / Rate |
| Childcare Allowance | KRW 200,000 per child for children under 6 | 1 Jan 2026 | Monthly |
| Parental Leave | Monthly limits from KRW 1,600,000 to KRW 2,500,000 depending on leave duration of up to 3 months. This is reduced to: KRW 2,000,000 per month and KRW 1,600,000 per month for leaves for leaves between 4th to 6th and 7th month onwards respectively. | 1 Jan 2026 | Per month by leave duration |
| Pension Income | Withholding rate reduced to 3% for lifetime annuity contracts | 1 Jan 2026 | N/A |
| Exit Tax | Expanded to include overseas shares without major shareholder requirement | 1 Jan 2027 | N/A |
The amendments focus on childcare, parental leave, and education-related tax benefits:
Key revisions support retirement security and rationalise pension taxation:
Amendments aim to enhance investment opportunities and tax equity:
Revisions provide support for housing and regional development:
The amendments streamline compliance and strengthen tax administration:
For detailed guidance on payroll, employment law, and compliance in South Korea, visit our South Korea Global Insights on the activpayroll website.
To understand how these changes may impact payroll, mobility, or HR policies in South Korea, complete our Contact Us form, and a member of our expert team will assist with your queries.